Whether liquid funds are a good option for building emergency corpus?

Liquid funds in India, as the name suggests are liquid. This means they can be easily converted from invested money into useable money. They have minimum 7 day’s of exit load. .

Before focusing on why to use liquid funds in India for emergency corpus, let’s focus on how to build an emergency fund.

Examine your Cash Flow:
First and foremost, check if can maintain the income which meets your monthly expenditure or basic needs. Due to pandemic-induced economic deceleration, salary cuts and business losses have affected the majority of the population throughout the world. If you have a surplus left after meeting your emergency corpus, you may then consider investing money.

Understand your risk-taking ability:
Before you invest your money, gauge your risk taking abilities. If you are an investor reaching your retirement, then you might want to take a conservative stand. This means holding a bigger emergency corpus, say 24-36 months equivalent of expenses into a liquid mutual fund. Liquid fund returns may be lesser compared to a longer-term debt fund or other funds such as equity mutual funds, however, they can serve the main purpose of an emergency fund; which is offering you safety and liquidity at the time of need.

When selecting the liquid funds to invest in, note that the focus should not be on return but the safety and liquidity aspect, especially if you are building emergency funds.

Liquid Funds may not vary a great deal in returns. Invest in liquid funds which invest completely in short-term government securities of not exceeding 91 days and have no private party risks. Due to the short maturity period, they are not subject to volatility in interest rate fluctuations.

Liquid funds taxation is as per the holding period. For short term capital gains of lesser than three years, the gains are taxed as per the income tax slab of the investor. For long-term capital gains exceeding three years, liquid funds are taxed as per 20% with indexation benefit.

Traits of Liquid Funds in India that makes them an excellent choice for the Emergency fund:

Liquidity:
Liquid funds can be easily converted to useable money. They can be easily redeemed and in just T +1 time the money gets credited to your account.

Risk:
Liquid funds are less risky as compared to equity mutual funds. This helps to minimize the downside risk of your investments due to from market volatility to a certain extent.

Last but not the least, always choose mutual funds to create the emergency corpus you desire as the Mutual Fund industry is managed by professionals and regulated by SEBI..

Living in the Present – The Power of Writing

Certain pastimes and activities have the power to maintain our consciousness in the present – the here and now. Rock climbing is a dangerous sport – a potentially lethal one – rock climbers live with the threat of death or injury every time they climb. The difficulties they face are objective ones, first and foremost, and the risks they take are calculated ones – rock climbers are not reckless – not living ones at any rate.

Most of the time, we live in a sort of non-time – a remnant of the past moving us to do things based on our memory and its power to haunt the present, or the future, with its ability to confront ourselves and our limitations ahead of action – apprehension.

The rock climber on the face of a cliff or mountain knows only the present; if he removes himself from the here and now of his situation, if he allows himself to be distracted from the task in front of him, he risks falling to his death or certain injury – he cannot allow himself to stray from the present.

The writer, Eckhart Tolle (‘The Power of Now’ and others) tells us that, “Life is now. There was never a time when your life was not now, nor will there ever be.” And if you think about it, that is absolutely true – the things that you did in your youth, you did in the present – not the past; the things you will experience in the future, in ten minutes or ten years time, will be experienced in the present – the present of then!

Now I know that rock climbing is out for most of us, only the young, athletic and the daring may go that way. Other dangerous sports are out for similar reasons, but experiencing the present in the natural intensity of the moment is still very much open to us.

Tolle again tells us that, “To be free of time is to be free of the psychological need of past for your identity and future for your fulfillment.” As someone who writes regularly and often, I can tell you that in the very act of writing – composing sentences, paragraphs – connected paragraphs – essays, stories, novels – whatever, the act of writing frees up the mind, removes encumbrances from the past and the future, planting you and your mind firmly in the present – by the power of concentration needed to write well and write continually.

I find writing something metaphorically like crossing a river using stepping stones – the next stone and the next after that are only visible and reachable once you step on the one before that next stone. Three stones further back and you are unable to jump the distance to that next stone – you can only reach it from the one you are standing on at the moment.
So it is with writing – you create meaning and sense as you write, and as you move further into your writing you find what you want to say. The well known playwright and novelist, Willy Russell, who penned those famous stories made into the successful films, ‘Educating Rita’ and ‘Shirley Valentine’ when asked why he wrote about what he didn’t know, said, “How do I know what I know until I write about it?”

He was not being facetious for once; he was describing the process of discovering what you know whilst writing. The accumulated knowledge – even wisdom’ from a life lived is down there waiting to be tapped. Then, once words start to bring it out, it will flow like oil from a well, gushing with knowledge. For the fact is that Russell was correct; you don’t know what you know until you write – no other medium draws something out of you in quite the same way.

Worthwhile, coherent conversation comes close, but that dependency on your interlocutor deprives you of the personal discovery that comes with writing.

Like rock climbing, writing has one very clear resemblance – few people ever get round to trying it, which is a pity because both activities free the mind from our normal obsession with what has gone and what may come. Now is all there is, in reality; and both scaling precipices and writing confront you with that fact. And, for the brief time you are out there on the north face of the Eiger, or, in my case, in the middle of writing something to be read by others, that presence liberates you from what has a habit of enslaving all of us – worry – stress – regrets – you can’t be worried, stressed, or regretful when you are totally engaged in something that requires you to debunk that which you can well do without.

The Warning Signs of a Debt Negotiation Rip-Off

A debt negotiation program is not the same thing as a debt management plan or credit counseling. Debt negotiation is a very risky endeavor that can end up having a dramatically negative effect on your credit score and your ability to obtain loans in the future. In fact, because of this many states have laws to protect you from debt negotiation companies.

Debt Negotiation Program Claims

Many firms that handle debt negotiations will claim that they are not in it for any profit. You may also be told that they can negotiate with your credit card companies to lower the amount you have to pay off. Most often, they will tell you that they are the only alternative to bankruptcy. They might even say that their program will have no negative effects on your credit score and, if it does, you can simply have the negative items removed from your report at the completion of the program. Normally they will say that you should stop paying the creditors and send your money to them instead. Something else they often will tell you that they will set up a special account for your money and that they will pay your creditors for you.

The Truth of the Matter

Just because a debt negotiation firm says that they are for nonprofit, that does not mean that the services they offer are offering to you are legitimate. On top of that, they cannot tell you for sure whether your creditors will accept a partial payment on the amount owed. In truth, if you stop making payments, chances are late fees and interest rates are going to keep adding up.

Once these late fees have added up to the point where you have exceeded your credit limit, over-limit fees and penalties will accumulate. This means that your old debt could easily become two or three times the amount that you originally owed. On top of all of this, the supposed nonprofit companies charge outrageous fees and they have a fee for everything. In truth, your creditors are not required to negotiate with you at all. What they are required to do is report accurate information, including the fact that you missed payments, to credit reporting agencies.

In some of these situations, it is not unusual for the creditor to sue you for their money. They can end up having the ability to put a lien on your house and to automatically garnish your wages. On top of this, the IRS may end up coming after you.

Tip-Offs That the Company Might Be a Rip-Off

Here are some simple signs that a debt negotiation agency might not be legitimate:

  • If they tell you they can remove unsecured debt
  • If they tell you they do not have to pay the entire amount back
  • If they have extremely high monthly fees
  • If they tell you not to talk to your creditors or make any more payments to them
  • If they tell you have to send your monthly payments of them and not directly to your creditors
  • If they tell you that your creditors will not sue you for not paying them
  • If they tell you their system has no negative outcomes on your credit report
  • If they tell you that they can have negative information on your credit report completely removed

If you begin working with a debt negotiation company and they give you any of these signs, stop working with them immediately. Go to your Better Business Bureau, State Attorney General, or your consumer protection agency and check up on the company.